Happy Days for Economic Advisers

By ROBERT D. HERSHEY Jr., Special to The New York Times

Published: September 5, 1989

WASHINGTON, Sept. 4—
In the early 1980's, the influence of the President's Council of Economic Advisers had fallen to such an ebb that upon his re-election Ronald Reagan seriously entertained the idea of abolishing it.

And if Congress resisted, the reasoning at the White House went, the President could simply refuse to make appointments to the three-member panel.

But not only did the council survive, but, under President Bush, it also seems to be making a comeback that some in the capital say may soon be inviting comparisons with the halcyon days of Walter W. Heller, the tax-cut proponent who advised Presidents John F. Kennedy and Lyndon B. Johnson and, a decade later, of Alan Greenspan, the chief economic adviser to President Gerald R. Ford.

There is little doubt that the council's resurgence, seen most clearly so far in the areas of trade and clean air, rests mainly on the personal chemistry of its current chairman, Michael J. Boskin, a 43-year-old professor of economics on leave from Stanford University, and his only client, Mr. Bush, a man with considerable respect for economists. Other Factors at Work

This relationship, cultivated also on the tennis court, involves frequent meetings, memo-writing and late-night phone calls when the President wants to follow up.

But many observers, including people around the council, see additional factors at work in the panel's revival.

One is that Dr. Boskin, although relatively new to the ways of Washington, has proved highly adept in advancing his views.

Mr. Reagan dealt with his council chiefs mainly through subordinates. One chairman in the Reagan Presidency, Martin S. Feldstein of Harvard, sometimes felt obliged to take public positions at odds with those of his superior. Dr. Feldstein is said to have been eager to preserve his academic reputation, but his disagreements may also have reflected an inability to make his voice heard in the Reagan White House.

But Dr. Boskin appears content with moving the center of gravity rather than insisting on total victory. Opponent of 'Japan Baiting'

''He's sensitive to the political process,'' said David D. Hale, a Chicago economist who also gives Dr. Boskin high marks for resisting the not inconsiderable amount of ''Japan baiting'' in Congress and among various interest groups.

Murray L. Weidenbaum, Mr. Reagan's first chairman of the Council of Economic Advisers, said Dr. Boskin had also benefited by coming to his post at the beginning of an Administration. Moreover, the Bush Administration has managed to avoid visible squabbling. ''The degree of leaking in this White House has come way down,'' Professor Weidenbaum said.

For his part, Dr. Boskin is reluctant to take credit for the council's new-found and widely acknowledged esteem. ''I feel very much part of a team assisting the President,'' he said in an interview, ''and I'm lucky to have terrific teammates.''

Whether it is the team or Dr. Boskin or both, in the area of trade the council is known to have been instrumental in arranging a compromise within the Administration on extending steel import quotas for 30 months while gradually ending them. The two-and-a-half-year period is long enough for the quotas to remain in effect for a crucial Congressional debate that is expected to take place in 1991, but short enough to end them before the next Presidential election. The council's efforts are also thought to have helped keep to a minimum the number of countries cited for unfair practices under the new trade law. Role in Clean Air Plan

Another significant contribution is seen in the Administration's clean air proposal, which seeks to harness market forces by introducing marketable permits and tradeable emissions rights. The goal is to reduce acid rain and automobile pollution by providing businesses with the incentives to do the job by the most efficient means they can devise.

Other issues on which the council's footprints have been found include the Administration's proposal for a subminimum wage for job training and in its cost-benefit analysis of ambitious legislation to expand the rights of the disabled, including employment and public accommodation.

Unlike some of his predecessors, Dr. Boskin appears to make considerable use of the two other members of his council, both of them of nearly the same age as he. They are John B. Taylor, 42, also on leave from Stanford, and Richard Schmalensee, 45, from the Massachusetts Institute of Technology.

Dr. Taylor, who in the Greenspan days worked as a senior staff member on the council and later served as consultant to the Townsend-Greenspan Inc. advisory firm in New York, who analyzes broad economic trends and who has also been designated to handle trade issues. His professional reputation rests in part on developing techniques for evaluating monetary policies of the International Monetary Fund and the Federal Reserve Board. Expert on Regulatory Policy

Dr. Schmalensee, who is still awaiting confirmation by the Senate, deals primarily with microeconomics, a branch of economics dealing with specific factors affecting an economy. His expertise is in antitrust and regulatory policy.

Practically every morning, usually shortly after Dr. Boskin returns from the White House staff meeting, the three advisers convene for perhaps a half hour to discuss virtually any subject of the day in which economics plays a role. The council also meets monthly with the Federal Reserve's board of governors on monetary policy - ''a subject we discuss openly, recognizing that the Fed has a degree of independence,'' Dr. Taylor hastened to declare.

The council was created in 1946, a time of great faith that the Government, provided with the best experts, could successfully manage the economy. That faith has waned, but even the few believers are not doing strenuous battle. In terms of the council's renewed influence, it hardly hurts to have inherited a solid economy.

For Dr. Boskin the bottom line remains, however, that it does not hurt to be known as a man who, although once seen as as a supply-sider, is willing to listen and to compromise.

''While I start from a firm set of principles, I've always considered myself pragmatic and eclectic, trying to understand and appreciate different points of view,'' Dr. Boskin said, characteristically weighing his words. ''In the end, the decisions are political decisions made by elected officials, and that's as it should be. Economic analysis and advice is only one input - sometimes quite important, other times less so.''

Photo of Michael J. Boskin, chairman of the Council of Economic Advisers